Wall Street pundits love to use the hyperbole of lower oil and gasoline prices to sell the idea that consumers now have much more discretionary cash to spend in the economy. But a new report out on March 11 shows that not only is this a complete fallacy, but that Americans are so broke they are having to use credit card debt just to make ends meet each month.
And that debt is now reaching nearly $1 trillion, and putting Americans in the same insolvent positions they found themselves at during the 2007 Housing Bubble crash, and subsequent Great Recession two years later.
A new study from CardHub.com says credit card debt in the US has jumped by about $71 billion to $917.7 billion in 2015. The average American household with credit card debt now owes $7,879, which is the highest figure since the 2008 financial crisis.
CardHub.com says $7,879 is just $500 from an “unsustainable tipping point”, when the risk of mass defaults rises dramatically.
The $71 billion debt ballooning last year is 24 percent higher than in 2014. The fourth quarter of 2015 alone saw credit card debt load surge to $52.4 billion. In the entire 2014 total credit card debt amounted to $57.4 billion.
"With seven of the past 10 quarters reflecting year-over-year regression in consumer performance, evidence is mounting to support the notion that credit card users are reverting to pre-downturn bad habits," said CardHub.com CEO Odysseas Papadimitriou in a statement. “All of this has us wondering: Is 2016 the next 2008 for credit markets?” the statement added.
According to the Fiscal Times estimates, if credit card debt in the US continues to grow at the current pace, American consumers would have to pay down their debts at a record rate to prevent escalated defaults and tightened credit availability. – Russia Today